Help for Companies and Businesses Affected by Coronavirus (COVID-19)

Coronavirus (COVID-19) has meant that the Government banks and other organisations are having to act quickly to offer help and support to companies and businesses affected.  The government shut down of whole sectors of the economy is having a profound impact.

This page is updated on news from the Banks, the Government, Suppliers, Local Authorities and the Law. There is a lot of information contained but all for your convenience and benefit, so take time and care to read all.

**Important Notice**  Most financial support and protections from creditor’s actions have now been withdrawn. Do not delay but act if you think your company will not be able to pay back its loans or afford to trade.

Prime Minister, Boris Johnson, takes the UK back into ‘Plan A’ – no mandatory face masks (but they are advised), no mandatory covid passes (unless a business wishes to use). Businesses are encouraged to return to the office as of Thursday 27 January.

So what has been done?

The UK Government

• New recovery loan scheme for all businesses 80% guaranteed by the government extended to run until June 2022.  The UK Government will guarantee 70% of all funds provided to lenders instead of the 80% previously guaranteed.
• The moratorium on commercial tenant convictions has been extended until March 2022.
• Winding up petitions could not be served on companies over debts due to Covid-19 until 30 September 2021. Wrongful trading provisions have been suspended as at June 2021.
• Rishi Sunak announced additional grants for businesses to survive the 3rd lockdown including; £4k for businesses with a rateable value of £15k or under, £6k for businesses with a rateable value between £15k and £51k and £9k for businesses with a rateable value of over £51k. A further £594 million is also being made available for Local Authorities and the Devolved Administrations to support other businesses which are not eligible for the grants but may be affected by the restrictions.
• Wage subsidies
• An extension to the VAT cut (now at 5%) for the hospitality and tourism industry, now in place until the end of March 2022.
• Loan deadlines have been pushed back to allow flexibility for businesses. The scheme is called Pay as you grow. Bounce back loans are able to be extended from six to ten years. It is thought this will half the average monthly repayment. No companies can see their credit ratings affected, struggling firms can make interest-only repayments and anyone can apply to suspend repayments for up to six months
• The government guarantee for business interruption loans has been extended to ten years
• An extension to the self-employed grant
• Announcement of the Jobs Support Scheme. This allows employers to keep employees in a job on short hours rather than making them redundant. It runs from December for six months.
• Changes have been made to the Corporate Insolvency and Governance act, extending the measures put in place for the benefit of businesses.
• Councils are being allocated funds to help hard-hit firms survive through lockdown through the £1.1 billion Additional Restrictions Grant. However, the level of funding is based on a formula of £20 per head of the local population — rather than the number of businesses in an area. Grants of £25,000 should become available.
• The Government launched a support scheme for the incomes of the self-employed, the Self-Employment Income Support Scheme (SEISS). Eligible applicants will receive a single grant worth 70% of average monthly trading profits for three months, capped at £6,570. Those self-employed who have been hit by the pandemic since 14 July can submit a claim i.e. shopkeepers affected by lockdown or builders unable to work on construction sites due to government restrictions.
• Rishi Sunak announces that there will be a £1000 per employee bonus paid to all employers that bring back a furloughed employee and the government will pay a proportion of wages to take on young employees as part of a Kickstart scheme
• The furlough scheme continued until the end of September 2021, with employees receiving 80% of their monthly wages up to £2,500. From July, employers must pay National Insurance and pension contributions, then 10% of pay from July before this percentage rises to 20% in August.
• From 26 May, there was an extension to the maximum loan size available through the CLBILS scheme from £50m to £200m. Note there will be restrictions on dividend and bonus payments by borrowers. More information can be found here.
• Businesses can apply for a Coronavirus business interruption loan. Businesses will not need to make VAT payments until the end of June 2020 since payments are deferred. Businesses have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. The need for personal guarantees for loans up to £250,000 has been removed.
• Bounce-back loans made available https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors The loan will be for 25% of turnover up to a maximum of £50k.  Interest for the first 12 months will be paid by the Government.
• Under the Coronavirus Job Retention scheme (CJRS), government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis.
• An online system for making claims under CJRS launched https://www.access.service.gov.uk/login/signin/creds.
• Income Tax payments due 31 July 2020 under the Self-Assessment system have been deferred to 31 January 2021, automatically without any applications needed.
• HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes
• A tax break on national insurance contributions. 500,000 people will no longer have to pay this tax. Those who still have to pay will save around £85 a year.
• The Corporate Insolvency and Governance Act has been enacted that stops landlords forfeiting leases, issuing petitions or statutory demands where rent has not been paid due to Coronavirus.  This is all good news for tenants struggling to pay the rent but it should be noted that it does not mean the liability has gone away…In fact, the debt will increase and interest charged will add to this.  It is likely thought that a deal can be arranged with your landlord given the circumstances

You can read the latest advice and guidance from government for businesses on its coronavirus pages, and  by keeping up to date with the news (information for other areas such as Wales and Ireland can also be seen on key news outlets). HMRC have a dedicated phone number for the coronavirus helpline targeted at businesses and the self-employed: 0800 024 1222.

Banks

• Business and mortgage customers do not have to pay back the capital on their loans for a period of 3 months, meaning they will only be paying the interest on their loans
• Extension to overdraft facilities
• Barclays and Natwest announced (26th March 2020) that they will NOT be requiring a personal guarantee on Business loans of less than £250k
• Commercial banks are NOT paying dividends to shareholders to preserve cash
• Santander launched a £40m fund, via its Fintech provider Ebury, to provide loans to SMEs
• The Bank of England pump £100bn into the UK economy to help fight the ”unprecedented” coronavirus-induced downturn. The BOE also made an emergency cut to interest rates from 0.75 to 0.1 per cent
• HSBC, Barclays, Santander and Natwest announce a number of supportive measures for its customers

Businesses

• Business rates holiday expired on the 30th June 2021 but is still be discounted by 66% until the 31st of March 2022
• For businesses who deferred paying VAT between 20 March 2020 and 30 June 2020, and are struggling to pay by 31 March 2021, a new payment scheme has been created where VAT can be deferred over a longer period. The online service for the VAT deferral payment scheme opens on 23 February 2021 until 21 June 2021. Businesses are able to make interest free monthly instalments (up to 11) – the idea being the earlier you join the more months you have to spread the VAT payments across. To join simply go to the UK Government portal site during its opening period. If you need more time to pay deferred VAT, it is advised to contact HMRC or get in touch with us, at Company Rescue, who can assist.
• Rishi Sunak unveils a £5bn scheme for High Street shops and hospitality firms in England
• Chancellor, Rishi Sunak, has set out a £1bn fund to help businesses hit by the rise in Covid cases, – namely, the leisure and hospitality sector. Included is cash grants of up to £6,000 per premises for each eligible firm. It has also been announced that the Government will cover Statutory Sick Pay for absences for small and medium sized employers across the UK due to COVID and will assist local authorities to support other businesses by making available £100 million discretionary funding. There will be £30 million additional funds available through the Culture Recovery Fund too.
• Morrisons announced that suppliers with between £100k and £1m turnover will be paid immediately on presentation of their invoice.  Over £1m turnover the term will remain 60 days.  Companies with less than £100k must wait 14 days
• Aviation industry suffers leaving airlines to reduce capacity
• Businesses i.e. hotels and supermarkets look to offer the vaccine
• All businesses able to open are advised to return to work in a Covid secure way
• Tens of thousands of England’s retail, leisure and hospitality firms have been made exempt from paying any business rates in the coming year (eligible for the ‘tax holiday’)
• There is a package for the self-employed
• Businesses with less than 250 employees can reclaim the cost of having to pay Statutory Sick Pay whilst eligible employees take the 14 isolation days off, due to the coronavirus. Those who are not eligible to sick pay (the self employed) are able to claim Employment and Support Allowance from the first day of illness rather than having to wait until day eight. An online service has been launched by HMRC for SMEs to recover Statutory Sick Pay Payments they have made to their employees amid the pandemic; The Coronavirus Statutory Sick Pay Rebate Scheme. Employers can use the service to make their claims, allowing them to receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13 March 2020. More information can be found here.
• An ‘eat-out-to-help-out’ scheme was launched in August, offering a discount of £10 per head on all meals out, Monday-Wednesday in August at participating restaurants. Some restaurants continued this on into September.

Devolved Regions of UK, Scotland, Wales and Northern Ireland

• Scotland’s Finance Secretary, Kate Forbes, announced a 12 month extension to the business rates holiday for the retail, hospitality, leisure and aviation sectors.
• The NHS covid pass scheme extended its uses across Wales, Scotland, UK and Ireland – with the aim to keep everyone safe by doing this.
• A support package of £40m was agreed for businesses in the hospitality sector within Northern Ireland, to assist them through the interruptions caused by Northern Ireland’s Covid restrictions.
• Additional support for hospitality in Wales is available.  The Welsh Restrictions Business Fund will enable eligible businesses in the hospitality, tourism and leisure sectors which pay non-domestic rates (NDR) to access grants of up to £5,000. It is estimated around 60,000 businesses, with a rateable value of under £150,000 will receive this support.
• Scottish retail, hospitality and leisure businesses, closed due to level 4 restrictions are to receive up to £9k of ‘one-off January’ grants through the Strategic Business Framework Fund. It is set that it will be a one off grant of £9,000 for larger retail and leisure businesses on top of the 4-weekly £3,000 and a grant of £6,000 for smaller retail and leisure businesses on top of the 4-weekly £2,000
• Since the start of the pandemic Scottish Government support for business and the economy has reached almost £3 billion
• The Scottish Government launched a website and helpline for small businesses struggling to cope. They also announced a £320m support package for affected businesses
• The Scottish seafood sector received a package of more than £5 million in financial support during the COVID-19 outbreak
• The Northern Ireland Executive announced a £367m package of grants to provide funding to around 30,000 businesses in Northern Ireland
• Liverpool’s metro mayor announced a £400,000 support package for the region’s music, film and TV industries. A fund will provide up to £10,000 in grants or loans to support small and medium-sized businesses in the music sector. Companies working in film or TV will be able to apply for investments of up to £25,000 per project to help them through the pandemic.

Regulations, Employment and Insolvency Law

Companies are legally entitled to cancel holidays due to staffing shortages. However, they must give notice equivalent to the length of holiday.  If an employee cancels their holiday, the company does not have an obligation to allow them back into work if they have made alternative arrangements.  Be aware that you can lay off staff without resorting to redundancies. For more information on this see the Government site.

Being an employer you may be worried about your rights and duties, The Federation of Small Businesses has a useful page with advice on this here.

If you need to make employees redundant during furlough then make sure you do it properly and don’t rush it.

The government has enacted the Corporate Insolvency and Governance Act which allows up to a 20 day moratorium, extendable with creditors permission which stops creditor actions against a company struggling due to the pandemic.  The act also means that Landlords cannot forfeit leases or issue winding up petitions against companys that cant pay their rent due to the pandemic until 31st March at the earliest.

Companies House has said that companies have an extra 3 months to file their accounts due to Coronavirus.

For further information regarding winding up petitions and their temporary ban see here: DLA Piper

How can businesses mitigate their problems?

In all honesty, the best advice for businesses is to follow the same advice given to the general public…keep an eye on what is happening in your local area/country and be sure to follow the  measures suggested.

How can we help?

We have numerous guides of options you can look into to help…download our CVA experts guide here or view our pre pack page.  If you feel you must close down permanently then see our page here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.

Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning. Remember to be realistic. The more realistic you are the better you will see a true reflection of your future cash situation, any deficiencies to be able to address any issues in advance.

Company Rescue have been providing services to distressed company directors for over 20 years and we will continue to try and help businesses of all shapes and sizes through what could be, a very turbulent, few months.

If you have serious concerns about the ability of your company to pay it’s bills and survive beyond the current situation please do give us a call, FREE on 0800 9700539.

Amid this crisis, we are all working from home so can answer your enquiries as normal. We also have a 24 hour online chat service on this website, manned by real people, not robots. If our chat team are unable to answer your questions straight away, then within a few hours one of our experienced team members will call you, listen to your concerns and offer some advice and suggest steps you can take.